A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves.

But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the “hamburgers” they will soon be buying. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.

WASHINGTON (MarketWatch) — A comment from a hawkish Federal Reserve official on Thursday that central-bank bond buying should continue beyond its scheduled end lifted stock markets and surprised many observers.

The Federal Reserve should consider extending its bond-buying program beyond October due to the market selloff to see how the U.S. economic outlook evolves, said James Bullard, the president of the St. Louis Fed, on Thursday.

At the moment, the Fed is buying $15 billion in securities each month, having tapered the so-called QE3 plan by $10 billion at each meeting this year. The U.S. central bank has said it expects to end its quantitative easing at the end of October, but Bullard noted that the timing was always data-dependent.

Fed Closes Chapter on Easy Money

Benefit of Bond-Buying Experiment Remains Unclear as Central Bank’s Focus Returns to Interest Rates

The Federal Reserve said it would end its long-running bond-purchase program, concluding a historic experiment that stirred disagreement among policy makers, economists and investors about its impact even though the central bank said it helped accomplish its goal of reducing unemployment.

The program ends with mixed reviews. While it clearly didn’t cause the inflation outbreak some predicted, it also didn’t clearly lead to a surge of economic output or hiring.

If all goes as they expect, officials will now turn their attention in the months ahead to discussions about when to start raising interest rates and how to signal those moves to the public before they happen. For now the central bank stuck to an assurance that it will keep short-term interest rates near zero for a “considerable time.” Many investors and Fed officials expect no rate increases until the middle of next year.

Plenty could go wrong and drive the Fed to tear up its plans. Twice before officials declared they would stop printing new money to buy bonds, only to restart the process when growth, hiring and inflation appeared to sag. One official, Minneapolis Fed President Narayana Kocherlakota, dissented from the Fed statement Wednesday because he wanted to keep the bond program going.

Underscoring its own uncertainty, the Fed’s official rate assurance included a new qualifier about the economic outlook: If the job market improves more quickly than expected or inflation rises, rate hikes could come sooner, and it could wait longer if the job market or inflation slow.

The inflation and employment backdrop now is subtly pulling the central bank in two directions. Officials noted “solid job gains” and said labor-market slack is “gradually diminishing,” signs of economic vigor that might spur early rate increases. Since July the Fed had been saying it saw “significant” slack, a phrase it struck this time around.

But Fed officials also noted falling energy prices and downward pressure on market expectations of inflation, signs of low inflation that give them leeway to wait before raising rates. Inflation has been running below the Fed’s 2% target for more than two years.

The central bank’s holdings of securities, loans and other assets have increased from $2.825 trillion when the program started to $4.482 trillion. The Fed has said it plans to maintain this level of holdings until after it starts raising short-term interest rates. Eventually, officials expect to reduce the holdings gradually by letting securities mature without reinvesting the proceeds.

The worst fears about bond buying haven’t come to pass. Inflation, as measured by the Commerce Department’s personal consumption expenditure price index, has been unchanged at 1.5% since September 2012. The dollar, as measured by the Fed’s broad dollar index, is up 6.7% in value compared to the world’s other currencies. Meantime, the price of gold, which some investors believe should rise when inflation fears pick up, has fallen from $1730.60 per ounce to $1229.20, a 29% decline.

Yet clear demonstrations of QE’s benefits are elusive. Though the jobless rate has declined from 8.1% before the latest program was launched to 5.9% in September, this is in part due to people leaving the work force and the ranks of those counted as unemployed. Job growth was 2.2 million in the 12 months before the Fed launched the latest round of bond buying and 2.6 million in the past 12 months, but it is hard to prove the faster growth has come even indirectly from the Fed’s efforts.

Fed officials say they are prepared to use bond buying again, but disagree about the circumstances that would warrant it. In addition to Mr. Kocherlakota, who called for continuing bond purchases at the latest meeting, St. Louis Fed President James Bullard said before the Fed meeting the central bank should consider continuing the purchases in light of falling inflation expectations.

John Williams, the San Francisco Fed president, said he would have no reservations about returning to bond purchases, but only if the economy is clearly taking a turn for the worse. For now, he and most other officials don’t think it will be needed.